A matter of style

INVESTORS in Australian equities face an uphill battle when choosing the right fund manager, with the number of managers and investment strategies increasing and an un-usually wide dispersion of returns, according to recent research by van Eyk.

The annual Australian Equities Review assessed the investments processes of 44 Australian equity managers.

Lead van Eyk Analyst Nigel Douglas said the findings reinforced the need for investors to understand what style category managers fell into.

“Given all the doom and gloom about the performance of the average manager, it is interesting to note that returns for the year to September 2002 ranged from 32.5 per cent [Tyndall, classified as ‘deep value’] to -9 per cent [Jardine Fleming, classified as ‘deep growth’],” Mr Douglas said.

“The trade-off between risk and return is likely to be lower in 2003, so this should favour quantitative/disciplined processes.

“Our research shows that value is now expensive after enjoying a strong run in 2001-02.”